Allied thinking

FST sits down with Darren McKenzie, CTO of Alliance & Leicester, to discuss his IT challenges for the next 12 months – a period which he envisages as “a year of transition” for the UK high street bank.

A widely known statistic bandied around the financial sector states that you are more likely to get divorced than switch banks. Despite our apparent loyalty (or lethargy) when it comes to sticking with our high street lender, there is still fierce competition between the banks to attract our business. Alliance & Leicester (A&L), which boasts over 250 branches in the UK, is no different in that regard. And with Darren McKenzie as its CTO the bank has a leader with a clear vision of how he wants to see his company tap into new technologies and meet the changing banking needs of the younger generation.

Of course, with more and more customers choosing to bank online from the comfort of their own homes, A&L has had to keep up with a rapidly changing environment. Indeed, McKenzie, who was hired by A&L’s new CIO, Ian Buchanan last May, sees online banking as a platform that is only going to expand in terms of usage. “The Internet has absolutely shaken and transformed most business models. You only have to look at the retail industry to see that those who haven’t adopted a direct channel are starting to fall to the wayside compared with those who have adjusted.” This is borne out in the figures quoted by McKenzie; around 60 percent of UK adults regularly use the internet, while 56 percent of adults bought something online last year. “That is a trend that is very much increasing and we are positioning ourselves very much in that space as we go forward.”

When FST recently caught up with McKenzie it was a particularly busy time for A&L, having just put its telecoms infrastructure in the capable hands of BT. As well as this firm plans are in the pipeline to change over its core banking platform in a phased process over the next two years. It would appear that the CTO’s in-tray is pretty full for the time being. In the mean time meeting customer needs in terms of technology is critical. “We need to make sure that we deliver everything as we say we are going to deliver it, and make sure it does what it says on the tin,” he asserts. “We have to make sure we are following the technology trends because it won’t be too long before consumer behaviour adopts more and more newer technologies, such as, , the use of SMS, web chat, video and multi-media. As an organisation in this arena you need to be catering for the next generation and where consumer behaviour will go.”

You get the impression from talking to McKenzie that he is a man who wants to see clear and direct results instead of long-winded processes bogged down by in-house red tape. He uses the embryonic stages of IT as an example of how he wants A&L to operate. “Back in the 1970s when computers first started coming out the person that wanted something went and spoke to the person who was responsible to make it happen. It is that level of agility that we want within this organisation so that when we come up with ideas we are actually only two steps from implementing these ideas.” McKenzie says this will deliver real results. “We want very much shorter delivery periods – not traditional, lengthy IT delivery periods. We very much want to get products to market quicker because that is the competitive market place we are in.”

Revamp
Steering the conversation to the deal with BT, FST was keen to discover more about how it came about. It transpires that when McKenzie arrived the bank was halfway through a strategic review looking into the company’s telecoms infrastructure. He acknowledges that the old setup was ‘sapping’ a great deal of management focus and becoming gradually more cost intensive. Something had to give, and so A&L set about looking for a telecoms firm to overhaul and manage the infrastructure. Enter BT. The telecoms giant managed the transition period and has now taken up the reigns of overseeing the day-to-day operations. Throughout 2007 BT will implement a more unified voice and data infrastructure.

“The way that we have structured the relationship is that instead of BT coming into a large technical environment and transform it for us, what we wanted them to do is manage what we have at the moment, then transition into a new set of technologies bringing us a converged network.. The relationship is not only about transformation of our technical infrastructure to get all of the benefits that we need as an organisation but about BT actually managing what we had from day one.”

A&L’s CTO was keen for the change to create a more efficient IT department and allow the company to implement processes without frustrating hold-ups. BT will bring together A&L’s voice and data services into a single, converged network. It will enable call centres and branches to communicate using VoIP and facilitates a more mobile workforce operating from different locations.

“One of the things that is really important to us, is that we give our organisation back some of that change capability itself. We don’t want to create a large IT department whereby when we want to make simple changes, they have to go through complex IT processes and six months later the result arrives. Because of what we are doing we are able to give some of the functional changes that the call centres demand back to the call centres.”

Making processes more straightforward appears to be at the heart of the overhaul, as McKenzie explains. “We are like any other bank in that we have a large voice and data infrastructure. If, for example, we wanted to turn on voice recording to one of our branches we need to go through a very-much traditional IT process of doing that. We need to go and procure the equipment, design the solution and work with the organisation on how to achieve the result – this often involves lengthy lead times.” So what is the situation now? “With the new infrastructure and because all of the services we will offer are network based applications, it is just the matter of a software change. When we talk about services being delivered to any geographical location it means we are getting away from everything being hard wired towards everything being soft wired instead. So we can put any service on at any point. This is whether it is voice recording, outbound dialling or additional call centre agents. They are all turned on very easily.”

Freeing up the decision making process is one thing, but the issue of cost doesn’t go away. With regards to the infrastructure upgrade, we ask, how much did the pressure to reduce costs affect the decision making process? “The upgrade fundamentally reduces our ongoing operating costs of managing a large, complicated infrastructure,” McKenzie acknowledges. “The other benefit is that we are looking at this as a service-oriented business model. The relationship with BT is that we want to have services – we don’t want to have the overheads. Our key management focus needs to be on delivering customer value, not managing large, core technology infrastructures that are very complex and an overhead.”

But flexibility really is one of the key outcome’s, according to McKenzie. “One of the biggest benefits that is going to materialise out of this relationship with BT is our flexibility to react as quickly as we want to consumers.” He adds: “It is the ability to turn on any services to any of our geographical locations at any time. We are a diverse business that offers multiple products, not only to retail bank consumers but to our commercial business as well. We have got a lot of diverse needs in our business that we need to be able to meet rapidly at any location.”

On the horizon
It would be fair to say that McKenzie is pleased with how things have gone so far. “This is BT’s bread and butter and what they are good at,” he enthuses. “It is therefore only appropriate that an organisation like BT come to do this for us. We are able to put our management focus on the things that are important to our customers and important to us. We are very, very happy with the output and how BT has managed it so far.”

But what is next on the agenda for the technology team at A&L? As it turns out as part of a wide ranging review of strategy instigated by CIO Ian Buchanan who joined the bank a year ago, McKenzie and his colleagues face another challenge – the small matter of A&L’s core banking change over., McKenzie says a great deal of work has already gone into the project. “We talk about the core banking platform rolling out in the next few years but the activity is already massively underway. We very much want the telecommunications project complete so we can concentrate on implementing, in a phased approach, our new banking platform throughout 2007/08 and 2009 as we transform that over.

In the more immediate future 2007 looks set to be a year of technological change – a change that McKenzie is confident that will benefit the bank and deliver better services and products for customers. “This is very much a transition year to transfer all of our networking technologies over into a new converged network. We have a large ATM infrastructure, corporate and branch infrastructure and data and telephony. That means we have to make the transition piece by piece, ensuring it works and moves forward. We are very much taking a phased approach so we have releases of the technology through 2007. We will also be looking at where we get the absolute maximum business benefit, both from a cost per saving perspective as well as flexibility which ultimately gives our customers better value.”

Darren McKenzie joined Alliance & Leicester in April 2006, continuing a very successful career managing and transforming technology services within the financial services sector, which had taken him firstly to Experian and more recently to the role of Technology Operations Director at Egg.

In recent years, he has led major business transformation programmes and created powerful coaching and mentoring teams, being a strong advocate that extraordinary results can be achieved through people fulfilling their own potential in the workplace. In his current role, he is personally accountable for bringing the most appropriate technology capabilities to enable Alliance & Leicester's position as the UK's leading direct bank.

Outside of work, he has a variety of hobbies that keep him busy, and even here his interest in network technology comes to the fore. He runs a large European website for online gamers, and is also a regular game participant. Contrary to the online gamer stereotype, he is also a keen athlete, completed several marathons and cycled from Land's End to John O'Groats. He is also involved with an international youth charity in various capacities.